Quebecor Inc. spent $830 million (US$666 million) in Canada’s wireless spectrum auction, a move that signals an ambition to challenge the country’s three dominant telecommunications companies in 5G services.

The Montreal-based cable and media company currently offers wireless services primarily in the province of Quebec. But it snapped up 294 licenses covering about 30 million people, including blocks of spectrum in southern and eastern Ontario, Alberta and British Columbia, positioning the company “to realize its ambition of boosting healthy competition in telecom beyond the borders of Quebec,” Quebecor said in a statement.

Quebecor shares fell 0.7 per cent to $32.62 at 12:34 p.m. in Toronto, even as shares of the three major Canadian wireless companies rose.

“The biggest surprise in the results is the $830 million spent by Quebecor,” CIBC World Markets analyst Robert Bek said in a note. The spending suggests “the clear aspiration to become the fourth national wireless player in Canada,” he said.

The aggressive move for a share of the 3,500 MHz spectrum, a critical component of the nation’s 5G rollout, paves the way for Quebecor to seek out acquisitions.

Quebecor Chief Executive Officer Pierre Karl Peladeau has expressed an interest in buying Freedom Mobile -- the wireless division of Shaw Communications Inc. that some analysts believe may be put up for sale as a condition of Rogers Communications Inc.’s proposed takeover of its rival.

Quebecor reiterated its interest in buying the asset, urging federal regulators examining the Rogers-Shaw deal to foster competition in the country of 38 million people.

“We are confident that we are the right player, the one with a real ability to break the oligopoly and put consumers across Canada back in the driver’s seat,” Peladeau said.

If assets aren’t available to buy at the right conditions, Quebecor’s Videotron unit can instead operate a virtual network in the new regions it plans to enter, Peladeau told analysts on Friday. Under that option, a company leases wireless network capacity from another provider -- something Videotron did in its early days in that business.

But under new rules, Quebecor would have to build its own network infrastructure in those regions within seven years.


Shares lag

For now, though, the license expense might be hard for investors to swallow. Concerns about Quebecor’s strategy in the auction, its eyeing of Freedom Mobile, and the recent departure of Videotron CEO Jean-Francois Pruneau were already weighing on the stock, Scotiabank analyst Jeff Fan wrote in a report earlier this month.

Quebecor shares are down about 4.5 per cent since the Rogers-Shaw deal was announced on March 15, trailing an index of Canadian telecom companies that’s up about 6.9 per cent.

“Quebecor’s out-of-province strategy as stated carries elevated strategic risk,” BMO Capital Markets analyst Tim Casey said in a note.

On the Friday call, Quebecor touted its success with Videotron and its financial discipline as analysts asked about the company’s next steps, its network building plans, and its ability to compete outside of Quebec.

It’s not the first time Quebecor, a company with roots in print media, has expressed national ambitions. In 2014, it paid $233 million for licenses in Ontario, Alberta and British Columbia, only to sell them. Casey said the company has generated gross profit of about $265 million in the past flipping spectrum.

“QBR spent much more in this auction than we had anticipated, but also ended up with much more spectrum than we expected,” Desjardins analyst Jerome Dubreuil said.

A vocal personality who has dabbled in provincial politics with the separatist Parti Quebecois, Peladeau was recently in the news for attempting to buy, through his investment company, struggling vacation operator Transat AT Inc. Those talks fell through.